Zupan and Yelic - [2010] FMCAfam 1064

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ZUPAN & YELIC

[2010] FMCAfam 1064

FAMILY LAW – Alteration of property interests – contribution – needs adjustment – payments made to members of family.

Family Law Act 1975, ss.75(2), 79, 90MT(1)(a), 90MZA, 90MZD
Family Law Rules 2004
Family Law (Superannuation) Regulations 2001

Hickey & Hickey [2003] FamCA 395
Kowaliw & Kowaliw (1981) FLC 91-092
AJO v GRO (2005) FLC93-218
Pierce & Pierce [1998] FamCA 74
Williams & Williams [2007] FamCA 313

Applicant:

MR ZUPAN

Respondent:

MS YELIC

File Number:

SYC 821 of 2009

Judgment of:

Altobelli FM

Hearing dates:

13-14 September 2010

Date of Last Submission:

14 September 2010

Delivered at:

Sydney

Delivered on:

21 September 2010

REPRESENTATION

Solicitors for the Applicant:

Moira Ryan Lawyers

Solicitors for the Respondent:

Self represented

ORDERS

Within 28 days of the date of these Orders the Husband pay to the Wife the sum of $60,000.00, failing which interest accrues at a rate prescribed by the Family Law Rules 2004.
Pursuant to Section 90MT(1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the interest held by the Wife (Member No. [omitted]) in the [omitted] Superannuation Fund (the Fund), the trustee of the Fund shall pay to the Wife an entitlement calculated in accordance with Part VI of the Family Law (Superannuation) Regulations 2001 using a base amount of $222,110.00 held on behalf of the Husband in the Fund and there will be a corresponding reduction in the entitlements held on behalf of the Husband which he would have had but for these Orders.
That for the purpose of these Orders:
(a)The base amount to be allocated to the Wife is the amount of $222,110.00;
(b)These Orders will have effect from the operative time;
(c)The operative time is 4 days after the Orders have been served upon the Trustees of the Fund;
(d)These Orders are binding on the Trustee of the Fund.
Each party and the Trustee of the Fund have liberty to apply in relation to the implementation of these Orders affecting the superannuation interests of the Wife in the Fund.
Pursuant to Section 90MZD of the Family Law Act 1975 as a matter of procedural fairness, the Trustees of the Fund, having been given notice of the intention of the parties to seek the Orders set out herein are bound by them as and from the date of service upon the Trustees of the Fund and shall give effect to these Orders.
Until the happening of:
(a)The establishment of a separate account in the name of the Wife; or
(b)The transfer or rolling into another superannuation fund of the payment created herein in favour of the Wife; or
(c)The Wife satisfies the condition of release and has paid the payment created by the Orders herein; or
(d)The Wife executes a waiver of rights within the meaning of Section 90MZA of the Family Law Act 1975 in relation to the payment split
the Husband is forthwith restrained from drawing upon or encumbering the member’s interest in the Fund or from executing any death benefit nomination in favour of any person or doing any act or thing that would have the effect of defeating, diminishing or otherwise reducing the allocated splittable payment or rendering any part of his interest as a “not splittable payment” within the meanings of Regulations 12 and 13 of the Family Law (Superannuation) Regulations 2001.
Unless otherwise specified in these Orders:
(a)Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
(b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

IT IS NOTED that publication of this judgment under the pseudonym Zupan & Yelic is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYC 821 of 2009

MR ZUPAN

Applicant

And

MS YELIC

Respondent

REASONS FOR JUDGMENT

I provide the following oral reasons in the matter of Zupan & Yelic. This is an application for property settlement under section 79 of the Family Law Act, commonly known as an application for property settlement. The applicant husband is 47 years old and is a [occupation omitted]. The respondent wife is nearly 40 years old and is currently unemployed. They married in 1995, separated in either 2007 or 2008, nothing turns on this, and thus cohabited for about 12 years or so. Both are of Chinese birth.
The respondent mother obviously struggled with her oral English communication skills during the hearing. She represented herself, though she had the assistance of an interpreter, who was used selectively but appropriately. The wife spoke with a thick accent, but was nonetheless able to be understood. They had one child, [X], who is seven, who turns eight on [date omitted]. Consent orders were entered into in relation to [X] on 13 September which provide for equal shared parental responsibility, that he lives with his mother and that the father has contact each alternate weekend from Friday to Monday plus half the school holidays.
By way of the father's amended application filed 16 February 2010, he seeks orders under section 79 that provides for each of the husband and the wife retaining what they presently hold. By closing submissions, the husband's case was that contribution should be assessed in his favour as to 55 per cent, and that even if there was a five per cent adjustment under section 75(2) in the wife's favour, there should be a section 75(2)(o) adjustment of 10 per cent back in his favour due to the wife's non-disclosure. The wife's case is that there should be either a 66 per cent or a 70 per cent property adjustment in her favour.
The issues emerging from the evidence are as follows: firstly, there are a number of balance sheet issues, particularly in relation to add-backs; secondly, I need to assess contribution; thirdly, I need to assess whether any adjustment should be made under section 75(2) of the Act; and fourthly I need to make a just and equitable order, particularly having regard to the fact that the superannuation assets in this case were of significant value compared to the non‑superannuation assets. In terms of the applicable law, the applicable law is of course found in Part VIII of the Family Law Act in section 79, and section 75(2).
The Full Court's decision in Hickey & Hickey [2003] FamCA 395 sets out the four interrelated steps that are part of the section 79 process, and I incorporate into these oral reasons a number of passages from that decision. This is a case where one of the most significant issues is assessing contribution, especially contribution as a result of moneys brought into the marriage by the husband, and I incorporate into these oral reasons a number of passages from the Full Court's decision in Pierce & Pierce [1998] FamCA 74 and Williams & Williams [2007] FamCA 313. One of the other issues in this case that relates to whether or not there should be add-backs of moneys that were variously sent by each of the parties to third persons and out of their control, and in that regard I incorporate into these oral reasons a number of passages from the Full Court's decision in AJO v GRO (2005) FLC 93-218.
I turn now to consider balance sheet issues. The husband's solicitor produced a balance sheet in draft form. The wife, who was self‑represented, did not. I did the best I could to ascertain the values and thereby create a balance sheet. Apart from add-backs, the only issues relate to the values of a Toyota Camry, and the household contents at items 6 and 7 of the draft balance sheet. In each case, the wife made it very clear that the values she asserted were based on the insurance value, rather than the current market value, and because of that, I accept the values attributed by him at items 6 and 7. There is clear authority to the effect that the relevant value is the current market value, and that the insurance value provides no assistance to the Court.
At items 11 and 12, the husband asserts that there should be add-backs of $85,416 and $68,897, being sums clearly paid by the wife to her sister, and which the wife acknowledged in cross‑examination, were sums held by the sister for the benefit of the wife. There can be no doubt whatsoever that these funds should be added back. It is clearly notional property falling within the second category referred to by the Full Court in AJO v GRO at page 81564, i.e. a premature distribution of matrimonial assets. The wife could offer no coherent rational argument to the contrary. I reject arguments she did attempt to make to the contrary.
The wife asserts that there should be added back the following sums of money, which were paid by the husband out of matrimonial funds: $60,000 paid to the husband's parents in mid‑2007, so that they might purchase a flat for them to live in; $30,000 paid to the husband's nephew in February 2009, so that the nephew could purchase a home; $78,000 paid for the benefit of his parents as a contribution towards health care costs. The sums in question total $168,000. The husband says they should not be added back, firstly, because some of the payments were made with the consent of the wife. I do not accept this. The wife denies this - I am not convinced that even if she consented that ipso facto this precludes a later add-back argument.
There is also an argument that these payments were made pursuant to a strong cultural norm to support family, and were therefore not within the Kowaliw & Kowaliw (1981) FLC 91-092 principles. I agree, in this regard, in the sense that the payment of the moneys was not waste, but that is not the issue, the question is: should it be added back? Clearly it should, pursuant to the same principle that the wife's money paid to her sister should be added back. That is to say, these payments were a premature distribution of matrimonial funds. Even the $30,000 payment clearly comes within this category, these sums must be added back. The husband's position was that if I did not accept his reasons as to why certain payments should not be added back, then I needed, consistently, to add back the $64,000 paid for the benefit of the wife's parents to enable them to migrate to Australia.
There is a dispute about this payment. The wife denies it was $64,000 and says it was $25,000, which her parents paid back out of their own resources. Of all the add-back transactions in this case, it is strange that in relation to this one, there is the least documentation. I am not satisfied that the payment asserted by the husband is established on the balance of probabilities. In any event, even if I have some doubts about the wife's evidence, I found her evidence about the financial circumstances of her parents' immigration to Australia to be consistent and firm, and hence, on this point, prefer her evidence over that of the husband. I therefore decline to make the asserted add-back.
Having regard to those matters, I find the balance sheet as follows:

Ownership		Description	Value
1	Husband	Commonwealth Bank account	3,258
2	Husband	Commonwealth Bank account	177,793
3	Husband	Clearview funds	49,498
4	Husband	IAG shares	5,230
5	Husband	Telstra shares	1,140
6	Husband	Toyota Camry	10,000
7	Husband	Household contents	3,000
8	Husband	Money paid by husband to family members	168,000
9	Wife	[omitted] shares	22,500
10	Wife	Telstra shares	1,200
11	Wife	Money paid in the wife’s sister’s name	154,313
TOTAL			435,932
12	Wife	Visa card debt	674
TOTAL			435,258
13	Husband	Superannuation	348,079
14	Wife	Superannuation	26,382
TOTAL			344,461

Net non superannuation assets	$435,258
Net superannuation assets	$344,461
TOTAL	$809,719

The net non‑superannuation assets are $435,258 and the total superannuation assets are $344,461. The total combined pool is $809,719. Non-superannuation assets make up 47.5 per cent of the pool, and superannuation assets 42.5 per cent of the pool.
I turn now to consider contribution issues. The husband asserts that at cohabitation he had three years of superannuation, that is, which had been accumulated since 1992, and which he asserts had a value of $11,419. He asserts savings of $15,000 at cohabitation, a motor vehicle worth $7000, and furniture $11,000. The wife does not cavil with the superannuation. Independent documents do tend to support the assertion of the $15,000 savings. The wife disputes that either the car or the furniture were unencumbered in the sense of subject to debts, whether secured or otherwise. I am prepared to accept only the superannuation and savings as initial contributions by the husband.
This is a marriage that subsisted for 12 years or so and produced one child. This is not a substantial initial financial contribution on the husband's part, having regard to the myriad contributions made by the husband and wife after that. During the marriage, the husband worked full-time as an [omitted], the wife worked either part-time or full-time in various capacities. When [X] was born in 2002 she was primarily responsible for his care. The husband and the wife had different roles and responsibilities within the marriage, they chose these roles for themselves. In their eyes, they must have valued these different roles as being valuable, and as equally valuable for the benefit of their family, hence, as co‑contributors towards the partnership that was their marriage. That seems to be their choice I do exactly the same. I assess contribution at 50/50 or as equal.
I consider now whether there should be an adjustment under section 75(2) of the Act. Subject to issues of non-disclosure to which I will shortly turn, the husband concedes a possible five per cent adjustment in favour of the wife in relation to her care of [X]. The husband says the wife is younger than he is, he pays child support as assessed, the wife is well qualified, even if not currently working. The wife clearly has worked in various [omitted] roles, even if she has not passed her [omitted] exams, and therefore, not only has a longer working life, but a good potential earning capacity. Implicit in the husband's case is that even though the wife has not worked since 2008, this must be at least in part separation related.
The wife asserts she has been unemployed since 2008, but has a Bachelor of [omitted] and has held positions in [omitted] companies, and various [omitted] positions in Australia, though not as an [occupation omitted]. She has tried to obtain her [omitted] qualifications but has failed several times. There is no doubt in my mind, from the wife's written evidence, that she is intelligent and quite articulate in terms of her written communication. She clearly understands figures, and I formed the view that she was quite an astute woman when it came to financial matters.
However, her oral communication skills in English are clearly problematic, and I can understand that this limits her capacity for employment in the [omitted] field insofar as oral communication skills are important. This limitation, combined with her ongoing responsibility for eight year old [X], is a significant section 75(2) consideration in her favour. What I am not prepared to accept, however, is that she has an illness or disability that prevents her from working, either at the moment, or into the future. There is no evidence of this, I do not accept the wife's protestations that she is depressed in the absence of medical evidence to this effect. She is clearly emotional, still, about the separation, but so are many litigants in her position, and that neither means that she is depressed, nor that she cannot work.
I expect the wife to be able to regain her earning capacity once these proceedings are over. However, it must be noted the husband earns $109,000 per annum, together with a generous superannuation scheme. Even he asserts as part of his case that the most that the wife earned was $50,000 during the marriage, which was half of his earnings. When all of these factors are taken into account, an adjustment in the wife's favour of 15 per cent under section 75(2) is appropriate.
However, the husband asserts that a finding of non-disclosure should be made against the wife, which should result in a 75(2)(o) adjustment back in his favour of 10 per cent. He asserts that the wife was, in her evidence, often evasive and unresponsive. He asserts that she fails to satisfactorily explain the enormous disparity in the income and expenses in her financial statement, especially when insisting that she has not drawn down on any of the moneys held by the sister. Indeed, there is some substance to these assertions. Given the wife's background in [omitted], and given my findings of her as being financially astute, her inability to explain the deficit in her financial statement is quite frankly unconvincing. She was evasive and unresponsive, even allowing for her emotional state, and the fact that she was self‑represented.
To mitigate this, however, I actually prefer her evidence over that of the husband in, for example, the issue of the money paid to the benefit of her parents. Moreover, she frankly conceded that she had paid substantial moneys to her sister, even though stoically resisting that it should be added back. Nonetheless, on balance, I am left with a strong impression that either she has more income than she discloses, or she has another capital sum she has not disclosed. I lean towards the former, not the latter.
I wish to record that I have a lingering, niggling doubt about whether the husband has been entirely frank with the Court about relevant documents, for example, about the money paid for the benefit of the wife's parents. And indeed, he may have instructed his solicitor to put matters to the wife in cross‑examination in circumstances where he probably knew there was no substance to the assertions, and in this regard I refer to the cross-examination about the Clearview account dated 4 March 2002, when the husband clearly conceded the possibility that this was the same money that went into other investments that were disclosed in the proceedings.
Taking into account all of these matters, I nonetheless find that there should be a 75(2) adjustment in favour of the husband, and I quantify this at five per cent, as I think that ten percent on a total pool of nearly $81,000 would be excessive. Accordingly, I make an adjustment under section 75(2) in favour of the wife of 10 per cent.
I turn now to consider the just and equitable aspect of a section 79 order. The wife will get 60 per cent of $809,719, or, $485,831. The husband will get 40 per cent of $809,719, or, $323,887. The wife already has assets in her possession or control, including the notional assets held by her sister of $203,721 net. Accordingly, she is entitled to a payment from the husband of $282,110. The husband asserts that this should be by way of super split. The husband's entitlement is, as I have indicated, $323,887, but this is less than the super he has. Clearly, some consideration needs to be given as to how the adjustment of super versus non‑super assets is made on the facts of this case. Clearly, the add-backs cause difficulty, especially on the husband's side, but this a situation of the husband's own creation, even though I accept that he acted in good faith and from a cultural perspective, was at all times acting appropriately.

So how then, does the husband pay to the wife an additional $282,110? The husband's liquid funds are, in reality, limited to about $77,000 including shares. He has no liabilities. The wife's needs, as can be discerned from the evidence, seem to be greater in the short term than in the long term. I would infer from her case that having generous super is not something that would be high on her agenda. She does have access to greater cash than the husband does, in the sense of moneys held by her sister. But then again, her needs are greater as well. It is not just and equitable, in my opinion, to give the wife all of her entitlement by way of super, she must get some cash.
The problems that this may cause the husband are, as I have indicated before, of his own making. I will certainly leave him with some cash, but order him to pay the $282,110 entitlement as follows: as to cash, $60,000, and as to super split, $222,110. I consider this to be as just and equitable as the circumstances of this case allows.
Accordingly, I intend to make, subject to an order dealing with notice to the trustee, orders to the following effect:
a)That within 28 days, the husband pay the wife $60,000, failing which, interest accrues at the rate prescribed under the family law rules.
b)That there be a super split of the husband's super, which provides a base amount to her of $222,110.
c)That each party otherwise retain all property in their possession or control.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Associate:

Date: 21 September 2010